Australian retail sales unexpectedly rose in January as households spent more on food and clothing after the central bank cut interest rates and the government gave cash handouts to families. Retail sales, seasonally adjusted, advanced 0.2 percent from December, when they climbed 3.8 percent, the most in eight years, the Bureau of Statistics said in Sydney today. The median forecast of 19 economists surveyed by Bloomberg News was for a 0.5 percent drop. Consumer spending and earnings at retailers such as JB Hi- Fi Ltd. are being supported by the lowest borrowing costs in four decades, plus government cash handouts to low and middle income earners. The central bank has slashed its benchmark interest rate by four percentage points to 3.25 percent since September and may cut again today. âSales remained at a very strong level,â said Benjamin Dinte, an economist at Macquarie Group Ltd. in Sydney. âThat said, anecdotal evidence from retailers, as well as very weak consumer confidence, suggests sales will come off.â http://www.bloomberg.com/apps/news?pid=20601068&sid=aPpU3Lzp1P0k&refer=economy Can´t hear anymore about gloom and doom. Need some good news !
That's because in Australia most people are on variable interest rates, so when the central bank cut rates the people actually have more cash in their pockets = economic stimulus. (Aust Reserve Bank interest rate 3.25% = standard mortgage rate 5.25%) I asked this question many months ago: http://www.elitetrader.com/vb/showthread.php?s=&threadid=140231 and the replies couldn't understand linking mortgages to the cash rate. In the US the Fed rate is 0.25% (or there abouts) and yet their banks still have mortgage rates at 6%, taking 5.75% cream!!!! No bank in Australia would even contemplate trying to pull this one, and i still don't understand why Americans put up with it. pneuma